The new Conservative/Liberal Democrat coalition government has now been in place for over a month. This got me thinking, with all their manifesto pledges regarding property what have they actually done so far? The answer is – quite a lot.
Almost immediately it was announced that Home Information Packs (HIPS) would be abolished. It is widely believed that these packs have achieved little more than reducing the number of properties coming to the market as well as the time taken to bring a property to market. The Energy Performance Certificate (EPC) will however remain. I believe this is the ideal compromise as although HIPS were undoubtedly a bad idea, a whole industry has built up around the EPC’s and it would have been wrong to destroy peoples businesses, especially given that EPC’s are actually a good idea.
Of course, with compromise in the air some manifesto pledges had to be forgotten and one of these was the conservative’s plans to increase the inheritance tax threshold. With huge increases in property values over the last decade or so, the current threshold is a great deal lower than it should be if it were to have kept pace with the increases. Shelving the Conservative’s plans unfortunately means that property owners in particular will not be able to pass on as much as perhaps they would like to, free of tax.
Also of impact to property investors is the announcement that Capital Gains Tax (CGT) will be increased to 28% for higher rate tax payers. There has been a lot of uncertainly and fear surrounding this in recent weeks but in reality the increase was nowhere near as high as was expected.
The new government then turned its attention to new developments. Firstly they reversed a Labour decision to classify gardens as brown field sites, giving local authorities greater powers to block proposed developments based on local objections.
Next they looked at housing density and abolished the ‘minimum density targets’ for new developments set by the previous government. The policy which dictates that at least 30 homes are built on every hectare of development land has been blamed for a profusion of apartments as well as threatening the existing character of towns and cities in addition to more traditionally green and open areas. There have also been signs that an existing policy which details that new developments must contain a set amount of social housing may also be reformed or scrapped.
Most recently has been the announcement that the Financial Services Authority (FSA) is to be scrapped and more power given to the Bank of England. Many will see this as a good move given FSA failures during the recent credit crunch and subsequent recession.
So there we have it, one month down and some major changes already in place. As property investors will we be affected? In a word, yes.
The new government has certainly hit the ground running and without doubt some of these announcements are good news, unfortunately some are not so good for us, but time will tell whether the positives will out way the negatives. One thing is always certain though; property investment is a great route to wealth and financial independence and right now offers some incredibly exciting opportunities and we have some of the best. Grab them while you can, with economic recovery in the air they may not exist for long.
